On December 18 and 19, Bitcoin moved very weakly or we can even say that it did not move at all. Its quotes continue to slightly plunge after an unsuccessful attempt to break through the 23.6% Fibonacci level, and the beginning of the expected corrective wave b as part of the trend segment that began 2 months ago is still not observed. Therefore, Bitcoin should start to move up now, since the first wave a has already turned out to be quite extended. However, there are growing risks in the cryptocurrency market. The Fed is tightening monetary policy and curtailing quantitative stimulus programs. The Bank of England has already raised the interest rate. The ECB is going to end its QE program in March 2022. In addition, the legislation on cryptocurrencies continues to tighten in China, but not only in this country. In America, former presidential candidate Hillary Clinton proposed introducing stricter regulation of cryptocurrencies, as she believes that this will help protect America from technological manipulation. According to Clinton, various private entities use digital assets in order to destabilize the US dollar, wanting to shake its status as a world reserve currency. Previously, information has also repeatedly appeared that the tax legislation in the United States will become much tougher with regard to cryptocurrencies and all transactions over $ 10,000 will have to be registered with the Tax Office.
Jerome Powell's second term as Fed President is negative news for Bitcoin.So says Mike Novogratz, who is the president of the cryptocurrency bank Galaxy Digital. Mr. Novogratz drew attention to the fact that the number of bears in the market increased after Powell's reassignment. The CEO of the crypto bank also said that inflation rose to its maximum in 40 years during Powell's reign. Now, the Fed will be forced to raise rates at a higher pace, which could lead to a decline in cryptocurrencies. Novogratz also believes that before the reappointment, Powell planned a soft and slow exit from monetary stimulus, but now that he has secured the support of the US President, he may more aggressively pursue the normalization process. Nevertheless, he also believes that Bitcoin's future will be amazing, as more and more investors, banks, funds, and companies pay attention to this cryptocurrency.
But in my opinion, the news background for Bitcoin in recent weeks is really weak, and there is no positive news. Therefore, we believe that its growth will be temporary and not strong (within wave b).
The trend's upward section by its internal structure does not cause any doubts and looks complete. If this is indeed the case, then the formation of a descending set of waves has begun and continues at this time. So far, it cannot be concluded that even the first wave of a new downward trend has ended. Thus, wave a can take on an even stronger and extended form. It is worth noting that Bitcoin is very dependent on the news background, as well as on the mood of the market. If the market decides to sell this cryptocurrency, then nothing prevents the first wave from acquiring a much more extended form. Since the attempt to break through the 23.6% Fibonacci level failed, the decline may continue with targets located around $42731 and $41394, which corresponds to 38.2% and 38.2% Fibonacci. There is also an option with an increase within wave b to $ 55295, from which a decline is expected.